Law

On Saturday I invitedSerial listeners to recall the Edgar Smith case. Smith got away, literally, with murder. He did it by convincing the media and the public (and to a lesser degree the courts) that he was innocent man, falsely convicted of brutally killing a teenage girl. After he was released he attempted another murder, confessed to the original one and went back to prison.

Now I invite Serial listeners to recall a counter example: the West Memphis Three, who were convicted as teenagers in 1994 for the murders of three boys in West Memphis, Arkansas in 1993. One was sentenced to death and the other two were given life sentences. It was alleged, on debatable evidence gained by poor police work, that the victims were killed in a Satanic ritual.

All three are now free, having given Alford pleas. These are “guilty” pleas in which innocence is still maintained. (It’s complicated. Look it up.) To make a long story too short, it is now clear that they got bum raps and that other persons are the more likely perps. The miscarriage of justice in the case is so extreme that the dad of one of the victims has taken up the Three’s cause.

I met two of the Three, plus the dad, in 2012 after a screening of the documentary West of Memphis at the Santa Barbara Film Festival. I’m sure they are innocent.

The Memphis Three’s case, like Edgar Smith’s, is irrelevant to Adnan Syed’s. (He’s serving time for murder in the case Serial explores). The jury is still in for that one, and Adnan is still officially guilty. But maybe keeping these other cases in mind will help us all keep our minds open.

Seems to me that “social” login buttons like these are meant for the convenience of the user. But too often liberties are taken with them.

For example, here is what one company says in its terms & conditions:

Certain functionality may enable you to log-in using Facebook Connect, a Facebook, Inc. application, which is intended to provide interconnectivity between the Services and your Facebook.com profile. By using the Connect feature, you permit us to access your facebook.com profile, including without limitation, information about you, your friends and privacy settings. When you use the Connect feature, you also agree to allow Facebook, Inc. to use information about your activities on our site and to access your facebook.com cookies.

This is an otherwise respectful (and respectable) company, which is why I’m not naming them here. They are also a retailer, and not supported by advertising. Nor is their offering “social” in the “social media” sense.

And, while the company might want Facebook profile stuff to better understand their customers, do they need it?

In answering the question, What do fully respectful sites need from social login?, it helps to ask another question: What does the individual need from that button, other than to log in with one click?

I’m asking these questions because this button here…

… needs definition of what respectful login is.

As I said in Time for Digital Emancipation, the definition (via the Respect Trust Framework) is that the user and the site respect each other’s boundaries. So we need to say what those boundaries are, or what they might be under different conditions. But a good place to start is by asking what the bare minimum needs of a site are.

Aereo‘s main appeal in the first place was helping viewers get over-the-air TV. If they had restricted their business and legal cases to that, instead of this…

Record & Stream Live TV Online with Aereo Cloud DVR

Coming soon to 19 more cities!

… they might still be in business. But nothing in that pitch — the last one they made, in the final version of their website while they were operating — said they were much different than a cable company. So, not surprisingly, the Supreme Court smacked them down for being a cable wolf in cloud wool. Here’s how the Court explained the decision:

The Copyright Act of 1976 gives a copyright owner the “exclusive righ[t]” to “perform the copyrighted work publicly.” 17 U.S.C. §106(4). The Act’s Transmit Clause defines that exclusive right to include the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.” §101.

I submit that Aereo failed because they didn’t stick with what they were for in the first place. Instead they decided to ride the “cloud” buzz, which confused the offering first and the Court second.

To understand how they might have won, you need some background.

Before the ’76 law, cable was called CATV, for Community Antenna TeleVision. CATV answered the market’s need for clear signals where reception of over-the-air signals was poor or absent. But once “cable networks” (TBS, HBO, ESPN, etc.) showed up, and it was obvious that the handful of legacy broadcast networks (ABC, CBS, NBC, PBS, Univision) would be outnumbered by new cable networks, those networks (and their programming sources) wanted to be paid by these new distributors, who were charging customers for retailing their goods (legally, “performances”). The ’76 law gave them leverage to force those payments.

Over-the-air (OTA) TV was still available for anybody to receive for free using an antenna, of course. But this was a legacy grace — an exception to the rule of closed distribution through cable and satellite. But the distinction was clear. Cable and satellite were Pay TV, and OTA was Free TV. The selection of free signals was (and remains) relatively small, but not much smaller than “basic” cable.

Arlington, VA – 07/30/2013 – New research released today from the Consumer Electronics Association (CEA) ® found that just seven percent of American TV households rely solely on an antenna for their television programming. The findings of the new study, U.S. Household Television Usage Update, are consistent with CEA’s 2010 research which found eight percent of TV households reported using an antenna only for television programming. According to historical CEA research, there has been a gradual decline in the percentage of TV households using antennas since 2005. The phone survey of 1,009 U.S. adults is comparable to a 2012 Nielsen study indicating nine percent of all U.S. TV households are broadcast TV/over-the-air only, a decrease from 16 percent in 2003.

For TV viewers, the DTV transition required new equipment to receive signals that were much harder to get. If you lived in any place shadowed from direct line-of-sight to signal sources, you were out of luck.

In the analog era, you could get signals with rabbit ears and a loop or a bowtie antenna on your TV, if you lived in an urban or suburban area. The pictures might have “snow” or “ghosts,” but you could see them. If you lived in an outlying suburb or a rural area, you would need a rooftop antenna. But DTV was much harder to get, and lots of people gave up and went to cable or just bailed from the whole thing.

It’s essential to note that the FCC’s claim that reception after the DTV transition would be “equivalent” was simply wrong. Here are the FCC’s maps of “equivalent” coverage after the transition. Text on that page says, “Signal strength calculations are based on the traditional TV reception model assuming an outdoor antenna 30 feet above ground level. Indoor reception may vary significantly.”

This is hokum. You’re not getting the signal without a good antenna, ideally placed, and even then your odds were short, because conditions need to be ideal.

The simple fact is that the DTV transition left millions of free TV viewers in the lurch — and that lurch was Aereo’s market. So here’s my point: There would have been no Aereo without the DTV transition.

Go to that last link and type in this zip code: 10040. It’s in the north end of Manhattan, where I am temporarily domiciled. You’ll get back a chart showing eleven strong signals, four moderate ones, and four weak ones. Our apartment is in that zip code, and we get nothing. Zip. Even with a directional outdoor antenna. Believe me, I’ve tried. There are a hundred blocks of buildings and terrain between us and the Empire State Building. If we want local over the air (OTA) TV, our only choice is — or was — Aereo.

By serving urban areas that got shafted by the DTV transition, Aereo is a perfect example of the marketplace at work: supply fulfilling demand. That should have been their case.

If Aereo had simply met the market’s demand for lost over-the-air signals, and supplied a DVR app for customers (rather than putting the DVR in The Cloud), they might have had a winnable case. But they didn’t argue that. Instead they stood behind the cloud and argued, in effect, for what they appeared to be: a way of circumventing copyright obligations by using over-the-air reception of signals as a loophole. Even Justice Scalia, in his dissent, said he wasn’t an Aereo fan: “I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed.”

Consumer access to free-to-air broadcast television is an essential part of our country’s fabric. Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States. And when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.

He’s kidding himself. OTA reception may be “meaningful” for 60 million Americans, but most of those people don’t care any more. And neither do today’s TV content production and distribution systems, which include far more than Hollywood and the broadcast/cable/satellite TV industries. They include you and me.

Still, some number of millions of people do care, and can’t get the free OTA signals they used to get in the analog age. That was Aereo’s market, and now that market is back in the lurch, probably permanently.

I believe the Court’s decision did two things:

Positioned over-the-air transmission as little other than a checkbox requirement for stations to maintain “must carry” status with cable systems. Since these signals are expensive to maintain, it’s a matter of time before they go down with the setting sun. This will require regulatory easing (for example, by maintaining “must carry” in the absence of an actual signal, which is already partially the case anyway, since the signals have been lost to a great many people). Watch for that to happen in the next few years.

Finished positioning cable as simply a paid distribution system for licensed content. The legal and historical connections to Community Antenna TV are now completely severed. To TV’s sources and distributors, Pay TV is the Only TV.

If you go to Aereo’s website now, you see a letter from Chet Kanojia. Here’s the money graf:

The spectrum that the broadcasters use to transmit over the air programming belongs to the American public and we believe you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud.

The legal case I outlined above would also have been stronger if Aereo had stuck with its original business case: charging viewers for access to their own antenna — not in “the cloud,” but in the physical world, looking directly at the signal source.

If Aereo had then provided apps on the receiving side (for tuning and recording), they would have been in a much better position, at least conceptually.

The Supreme Court understands demand and supply. If Aereo had said, “We’re only serving over-the-air TV viewers who lost their signals in the DTV transition,” the decision would have been framed as one between standing law and market demand. The Court might still have decided in favor of the law, but it would have been clear to them that market demand was in play. But Aereo clouded their case, literally. So the Supremes fell back on what they understood, which was the ’76 law.

Neither Mosaic nor Navigator were instruments of the advertising business. They were boards we rode to surf from site to site across oceans of data, and cars we drove down the information superhighway.

Economically speaking, Firefox is an instrument of advertising, and not just a vehicle for users. Because, at least indirectly, advertising is Firefox’s business model. Chrome’s too. (Apple and Microsoft have much smaller stakes in advertising, and offer browsers mostly for other reasons.)

This has caused huge conflicts for Mozilla. On the one hand they come from the users’ side. On the other, they need to stay in business — and the only one around appears to be advertising. And the market there is beyond huge.

But so is abuse of users by the advertising industry. This is made plain by the popularity of Adblock Plus (Firefox and Chrome’s #1 add-on by a huge margin) and other instruments of prophylaxis against both advertising and tracking (e.g. Abine, Disconnect, Ghostery and Privowny, to name a few).

I don’t care what publishers want, or that they really like this new scheme to increase their marketing revenue. Don’t add more tracking.

I’m beginning to realize that Mozilla is working to make Firefox as attractive to publishers as possible, while forgetting that those eyeballs looking at their ads could be attached to people who don’t want to be targeted. Stop it. Remember your roots as a “we’ll take Mozilla’s code, and make a great thing with it”, and not as “Google pays us to be on the default toolbar”.

Dragonic Overlord:

Absolutely terrible idea.

The last thing the internet needs is more “personalization” (read: “invasion of my privacy”). All your marketing jargon does nothing to hide the fact that this is just another tool to allow advertisers, website owners, the NSA, and others to track users online habits and, despite any good intentions you might have, it’s rife with the potential for abuse.

Tracy Licklider:

Bad idea. I do not want it. I think you misstate the benefits of the Internet. One of the most salient benefits of the Internet is for web sites, advertisers, and ISPs who are able to build dossiers about individuals’ private lives/data, generally without most users being aware of the possibility and generally without the users’ consent.

One of the main reasons Firefox has succeeded is that it, unlike all the other browsers, was dedicated to users unfettered, secure, and as private as possible use of the Internet.

User:

If this “feature” becomes part of FireFox you’ll loose many users, if we wanted Chrome like browser we wouldn’t have chosen FireFox. We chose FireFox because it was DIFFERENT FROM Chrome but lately all I see is changes that make it similar and now you want to put spyware inside? Thanks but no thanks.

Then in February, Darren Herman, Mozilla’s VP Content Services, posted Publisher Transformation With Users at the Center, introducing two new programs. One was User Personalization. (Darren’s link goes Justin’s July piece.) The other was something called “directory tiles” that will appear on Firefox’s start page. He wasn’t explicit about selling ads in the tiles, but the implication was clear, both from blowback in the comments and from coverage in other media.

Said Reuters, “Mozilla, the company behind the Firefox Internet browser, will start selling ads as it tries to grab a larger slice of the fast-expanding online advertising market.”

Romain Dillet in TechCrunch wrote, “For the last couple of years, Mozilla and the advertising industry have been at odds. The foundation created the do-not-track feature to prevent targeted advertising. When users opt in, the browser won’t accept third party cookies anymore, making it much harder to display targeted ads around the web. Last year, Mozilla even chose to automatically block third-party cookies from websites that you hadn’t visited. Now, Mozilla wants to play ball with advertisers.”

The faithful didn’t like it. In Daring Fireball, John Gruber wrote, “What a pile of obtuse horseshit. If you want to sell ads, sell ads. Own it. Don’t try to coat it with a layer of frosting and tell me it’s a fucking cupcake.”

When we have ideas about how content might be useful to people, we look at whether there is a revenue possibility, and if that would annoy people or bring something potentially useful. Ads in search turn out to be useful. The gist of the Tiles idea is that we would include something like 9 Tiles on a page, and that 2 or 3 of them would be sponsored — aka “ads.” So to explicitly address the question of whether sponsored tiles (aka “ads”) could be included as part of a content offering, the answer is yes.

These sponsored results/ ads would not have tracking features.

Why would we include any sponsored results? If the Tiles are useful to people then we’ll generate value. That generates revenue that supports the Mozilla project. So to explicitly address the question of whether we care about generating revenue and sustaining Mozilla’s work, the answer is yes. In fact, many of us feel responsible to do exactly this.

Clearly Mozilla wants to continue down the advertising path, which many of its most passionate users don’t like. This position makes sense, given Mozilla.com‘s need to make money — somehow — and stay alive.

By becoming an advertising company (in addition to everything else it is), Mozilla now experiences a problem that has plagued ad-supported media for the duration: its customers and consumers are different populations. I saw it in when I worked in commercial broadcasting, and I see it today in the online world with Google, Facebook, Twitter… and Mozilla. The customers (or at least the main ones) are either advertisers or proxies for them (Google in Mozilla’s case). The consumers are you and me.

The difference with Mozilla is that it didn’t start out as an advertising company. So becoming one involves a change of nature — a kind of Breaking Bad.

It hurts knowing that Mozilla is the only browser-maker that comes from our side, and wants to stay here, and treat us right. Apple clearly cares about customers (witness the success of their stores, and customer service that beats all the competition’s), but its browser, Safari, is essentially a checkbox item. Same goes for Microsoft, with Explorer. Both are theirs, not ours. Opera means well, but it’s deep in fifth place, with a low single-digit market share. Google’s Chrome is a good browser, but also built to support Google’s advertising-based business model. But only Mozilla has been with us from the start. And now here they are, trying their best not to talk like they’ve been body-snatched by the IAB.

Is it just a coincidence that May 2013 is also when Jay Sullivan made that first post, essentially announcing Mozilla’s new direction, toward helping the online advertising industry? Possibly. But that’s not what matters.

What matters is that Mozilla needs to come back home: to Earth, where people live, and where the market is a helluva lot bigger than just advertising. I see several exciting paths for getting back. Here goes.

1) Offer a choice of browsers.

Keep Firefox free and evolving around an advertising-driven model.

And introduce a new one, built on the same open source code base, but fully private, meaning that it’s the person’s own, to be configured any way they please — including many new ways not even thinkable for a browser built to work for advertisers. Let’s call this new browser PrivateFox. (Amazingly, PrivateFox.org was an available domain name until I bought it last night. I’ll be glad to donate it to Mozilla.)

Information wants to be free, but value wants to be paid for. Since PrivateFox would have serious value for individuals, it would have a price tag. Paying for PrivateFox would make individuals actual customers rather than just “users,” “consumers,” “targets” and an “audience.” Mozilla could either make the payment voluntary, as with public radio and shareware, or it could make the browser a subscription purchase. That issue matters far less than the vast new market opportunities that open when the customer is truly in charge: something we haven’t experienced in the nineteen years that have passed since the first commercial websites went up.

PrivateFox would have privacy by design from the start: not just in the sense of protecting people from unwelcome surveillance; but in the same way we are private when we walk about the marketplace in the physical world. We would have the digital equivalent of clothing to hide the private parts of our virtual bodies. We would also be anonymous by default — yet equipped with wallets, purses, and other instruments for engagement with the sellers of the world.

With PrivateFox, we will be able to engage all friendly sites and sellers in ways that we choose, and on terms of our choosing as well. (Some of those terms might actually be more friendly than those one-sided non-agreements we submit to all the time without reading. For more on what can be done on the legal front, read this.)

(Yes, I know that Netscape failed at trying to charge for its browser way back in the early days. But times were different. What was a mistake back then could be a smart move today.)

Shopping is broken. In the fifties, if you wanted to buy a toaster, you only had a few practical choices. Maybe you went to the nearest department store and selected from the three models available. Or maybe you found your toaster in the Sears catalog. In a way, you were the hunter, and the toaster was the prey. You knew approximately where it was located, and you tracked it down and bagged it. Toasters couldn’t hide from you.

Now you shop on the Internet, and you can buy from anywhere on the planet. The options for any particular purchase approach infinity, or so it seems. Google is nearly worthless when shopping for items that don’t involve technology. It is as if the Internet has become a dense forest where your desired purchases can easily hide.

Advertising is broken too, because there are too many products battling for too little consumer attention. So ads can’t hope to close the can’t-find-what-I-want gap.

The standard shopping model needs to be reversed. Instead of the shopper acting as hunter, and the product hiding as prey, you should be able to describe in your own words what sort of thing you are looking for, and the vendors should use those footprints to hunt you down and make their pitch.

There are many ways of doing this. More than a dozen appear under “Intentcasting” in this list of VRM developers. Some are under wraps, but have huge potential.

Intentcasting sets a population comprised of 100% qualified leads loose in the marketplace, all qualifying their lead-ness on their own terms. This will be hugely disruptive to the all-guesswork business that cherishes a 1% click-through rate in “impressions” that mostly aren’t — and ignores the huge negative externalities generated by a 99+% failure rate. It will also generate huge revenues, directly.

This would be a positive, wealth-creating move that should make everybody (other than advertising mill-keepers) happy. Even advertisers. Trust me: I know. I co-founded and served as Creative Director for Hodskins Simone & Searls, one of Silicon Valley’s top ad agencies for the better part of two decades. Consider this fact: No company that advertises defines themselves as “an advertiser.” They have other businesses. Advertising might be valuable to them, but it’s still just a line item on the expense side of the balance sheet. They can cut or kill it any time they want.

“Buy on the sound of cannons, sell on the sound of trumpets,” Lord Nathan Rothschild said. For the last few years advertising has been one giant horn section, blasting away. If online advertising isn’t a bubble (which I believe it is), it at least qualifies as a mania. And it is the nature of manias to pass.

Business-wise, investing in an advertising strategy isn’t a bad bet for Mozilla right now. But the downsides are real and painful. Mozilla can reduce that pain by two ways:

Join Don Marti, Bob Hoffman (the Ad Contrarian) and others (myself included) who are working to separate chaff from wheat within the advertising business — notably between the kind of advertising that’s surveillance-based and the kind that isn’t. Obviously Mozilla will be working on the latter. Think about what you would do to fix online advertising. Mozilla, I am sure, is thinking the same way.

Place bets on the demand side of the marketplace, and not just — like everybody else — on the supply side.

Here on Earth we have a landing site for Mozilla, where the above and many other ideas can be vetted and hashed out with the core constituency: IIW, the Internet Identity Workshop. It’s an inexpensive three-day unconference that runs twice every year in the heart of Silicon Valley, at the Computer History Museum: an amazing venue.

Phil Windley, Kaliya Hamlin and I have been putting on IIW since 2005. We’ve done seventeen so far, and it’s impossible to calculate how far sessions there have moved forward the topics that come up, all vetted and led by participants.

Here’s one topic I promise to raise on Day One: How can we help Mozilla? Lots of Mozilla folk have been at IIWs in the past. This time participating will have more leverage than ever.

— is happening this weekend in New York, San Francisco and elsewhere. Read all about it here, here and here.

I’ll be there to help start things off, at 10am tomorrow. (Registration starts at 9am.) My job on the opening panel is to make a 2-3 minute statement of what I’d like to see in the form of legal hackery. Here goes:

Create better means for expressing personal policies and preferences (such as Do Not Track) than are currently available — and putting these in the individual’s own tool box, rather than appearing only as choices presented by others, such as browser makers.

On the panel I will advocate for individuals as independent entities with full agency, rather than merely “users” of others’ systems, or victims of privacy abuse awaiting policy relief. This means I will argue for thinking and hacking toward building and filing the individual’s own tool box, rather than just tweaking the broken technical and legal systems we already have. (Though doing that is good too. Others will be there to advocate and hack on that.)

Whether we like it or not, ads are what makes the current internet work. They are what ensures the “free” we crave and benefit from, and if you dig deep enough you will find that nobody working in web development or design is not in one way or another paid by income stemming from ad sales on the web.

Saying ads are what make the Internet work is like like saying cities are what make geology work. Yes, the Internet supports commercial activity, but it is not reducible to it. For each of us to enjoy full agency on the Web, this distinction needs to be clear from the start.

Browser makers are stuck right now between many rocks (their users) and a hard place (advertising-supported websites). On the one hand they want to do right for users, and on the other they want to do right for what the ad industry now calls “publishers”. Since surveillance-fed “personalization” is big with those publishers, and lots of users don’t like it (AdBlock Plus is the top browser extention, by far), the browser makers are caught in the middle. You can see the trouble they have with this conflict in A User Personalization Proposal for Firefox, which was floated by Justin Fox of Mozilla last July. In it he writes,

We want to see even more personalization across the Web from large and small sites, but in a transparent way that retains user control. The team at Mozilla Labs is focused on exploring ways to move the Web forward, and has thought a lot about how the browser could play a role in making useful content personalization a reality.

The blowback in the comments was harsh and huge. One sample:

The last thing the internet needs is more “personalization” (read: “invasion of my privacy”). All your marketing jargon does nothing to hide the fact that this is just another tool to allow advertisers, website owners, the NSA, and others to track users online habits and, despite any good intentions you might have, it’s rife with the potential for abuse.

I’m not bringing this up to give Mozilla or the other browser makers a hard time, but to suggest that the solutions we need start outside the browser. (And seeing them that way may also be good for the browser folks.)

Simply put, what we need most are tools for ourselves, that help in our dealings with all other parties. Not just protections from bad actors, or ways to make bad practices less bad.

Net neutrality is a dead man walking. The execution date isn’t set, but it could be days, or months (at best). And since net neutrality is the principle forbidding huge telecommunications companies from treating users, websites, or apps differently — say, by letting some work better than others over their pipes — the dead man walking isn’t some abstract or far-removed principle just for wonks: It affects the internet as we all know it.

Once upon a time, companies like AT&T, Comcast, Verizon, and others declared a war on the internet’s foundational principle: that its networks should be “neutral” and users don’t need anyone’s permission to invent, create, communicate, broadcast, or share online. The neutral and level playing field provided by permissionless innovation has empowered all of us with the freedom to express ourselves and innovate online without having to seek the permission of a remote telecom executive.

But today, that freedom won’t survive much longer if a federal court — the second most powerful court in the nation behind the Supreme Court, the DC Circuit — is set to strike down the nation’s net neutrality law, a rule adopted by the Federal Communications Commission in 2010. Some will claim the new solution “splits the baby” in a way that somehow doesn’t kill net neutrality and so we should be grateful. But make no mistake: Despite eight years of public and political activism by multitudes fighting for freedom on the internet, a court decision may soon take it away.

He continues,

How did we get here?

The CEO of AT&T told an interviewer back in 2005 that he wanted to introduce a new business model to the internet: charging companies like Google and Yahoo! to reliably reach internet users on the AT&T network. Keep in mind that users already pay to access the internet and that Google and Yahoo! already pay other telecom companies — often called backbone providers — to connect to these internet users.

Neither #2 nor #3 have come to pass, except in very limited ways. So, since #1 seems to be on the verge of happening, here’s what I wrote about it. There is a fair amount of link rot, but the points are still sharp — and depressing to contemplate:

Are you ready to see the Net privatized from the bottom to the top? Are you ready to see the Net’s free and open marketplace sucked into a pit of pipes built and fitted by the phone and cable companies and run according to rules lobbied by the carrier and content industries?

Do you believe a free and open market should be “Your choice of walled garden” or “Your choice of silo”? That’s what the big carrier and content companies believe. That’s why they’re getting ready to fence off the frontiers.

With the purchase and re-animation of AT&T‘s remains, the collection of former Baby Bells called SBC will become the largest communications company in the US–the new Ma Bell. Verizon, comprised of the old GTE plus MCI and the Baby Bells SBC didn’t grab, is the new Pa Bell. That’s one side of the battlefield, called The Regulatory Environment. Across the battlefield from Ma and Pa Bell are the cable and entertainment giants: Comcast, Cox, TimeWarner and so on. Covering the battle are the business and tech media, which love a good fight.

The problem is that all of these battling companies–plus the regulators–hate the Net.

Maybe hate is too strong of a word. The thing is, they’re hostile to it, because they don’t get it. Worse, they only get it in one very literal way. See, to the carriers and their regulators, the Net isn’t a world, a frontier, a marketplace or a commons. To them, the Net is a collection of pipes. Their goal is to beat the other pipe-owners. To do that, they want to sell access and charge for traffic.

There’s nothing wrong with being in the bandwidth business, of course. But some of these big boys want to go farther with it. They don’t see themselves as a public utility selling a pure base-level service, such as water or electricity (which is what they are, by the way, in respect to the Net). They see themselves as a source of many additional value-adds, inside the pipes. They see opportunities to sell solutions to industries that rely on the Net–especially their natural partner, the content industry.

They see a problem with freeloaders. On the tall end of the power curve, those ‘loaders are AOL, Google, Microsoft, Yahoo and other large sources of the container cargo we call “content”. Out on the long tail, the freeloaders are you and me. The big ‘loaders have been getting a free ride for too long and are going to need to pay. The Information Highway isn’t the freaking interstate. It’s a system of private roads that needs to start charging tolls. As for the small ‘loaders, it hardly matters that they’re a boundless source of invention, innovation, vitality and new business. To the carriers, we’re all still just “consumers”. And we always will be.

“Piracy” is a bigger issue to the cargo sources than to the carriers. To the carriers, “fighting piracy” is a service offering as well as a lever on regulators to give carriers more control of the pipes. “You want us to help you fight piracy?”, the transport companies say to the content companies. “Okay, let’s deal.” And everybody else’s freedoms–to invent, to innovate, to do business, to take advantage of free markets and to make free culture–get dealt away.

The carriers have been lobbying Congress for control of the Net since Bush the Elder was in office. Once they get what they want, they’ll put up the toll booths, the truck scales, the customs checkpoints–all in a fresh new regulatory environment that formalizes the container cargo business we call packet transport. This new environment will be built to benefit the carriers and nobody else. The “consumers”? Oh ya, sure: they’ll benefit too, by having “access” to all the good things that carriers ship them from content providers. Is there anything else? No.

Crocodile grins began to grow on the faces of carriers as soon as it became clear that everything we call “media” eventually would flow through their pipes. All that stuff we used to call TV, radio, newspapers and magazines will just be “content” moving through the transport layer of the pipe system they own and control. Think it’s a cool thing that TV channels are going away? So do the carriers. The future à lá carte business of media will depend on one medium alone: the Net. And the Net is going to be theirs.

The Net’s genie, which granted all those e-commerce wishes over the past ten years, won’t just get shoved back in the bottle. No, that genie will be piped and priced by the packet. The owners of those pipes have a duty to their stockholders to make the most of the privileged position they’ve been waiting to claim ever since they got blind-sided, back in the 80s and 90s. (For an excellent history of how the European PTTs got snookered by the Net and the Web, see Paul F. Kunz’ Bringing the World Wide Web to America.) They have assets to leverage, dammit, and now they can.

Does it matter that countless markets flourish in the wide spaces opened by agreements and protocols that thrive at the grace of carriage? Or that those markets are threatened by new limits, protections and costs imposed at the pipe level?

No.

Thus, the Era of Net Facilitation will end. The choke points are in the pipes, the permission is coming from the lawmakers and regulators, and the choking will be done. No more free rides, folks. Time to pay. It’s called creating scarcity and charging for it. The Information Age may be here, but the Industrial Age is hardly over. In fact, there is no sign it will ever end.

The carriers are going to lobby for the laws and regulations they need, and they’re going to do the deals they need to do. The new system will be theirs, not ours. The NEA principle–Nobody owns it, Everybody can use it, Anybody can improve it–so familiar to the Free Software and Open Source communities will prove to be a temporary ideal, a geek conceit. Code is not Law. Culture is not Free. From the Big Boys’ perspective, code and culture are stuff nobody cares about.

That’s us: Nobody.

The new carrier-based Net will work in the same asymmetrical few-to-many, top-down pyramidal way made familiar by TV, radio, newspapers, books, magazines and other Industrial Age media now being sucked into Information Age pipes. Movement still will go from producers to consumers, just like it always did. Meet the new boss, same as the old boss. Literally.

The deals that matter will be done between tops of pyramids. Hey, it’s easier to do business with the concentrated few than the dispersed many. The Long Tail can whip itself into a frenzy, but all the tech magazines and blogs in the world are no match for the tails and teeth of these old sharks. (Hey, Long Tailer, when’s the last time you treated your erected representatives to private movie screenings, drafted their legislation, ghosted their committee reports, made a blockbuster movie or rolled fiber across oceans?)

Google and Yahoo and Amazon and eBay and e-commerce and free software and open source and blogging and podcasting and all the rest of that idealistic junk have had their decade in the sun. Hell, throw in Apple and Microsoft, too. Who cares? Them? Doesn’t matter how big they are. They don’t matter. They’re late to the game.

We all know the content business got clobbered by this peer-to-peer crap. But the carriers took a bath by building out the Net’s piped infrastructure. They sank $billions by the dozen into fiber and copper and routers and trunks, waiting for the day when they’d be in a position to control the new beast fleshed on the skeleton that they built.

How concerned are you about Internet upstarts like Google (GOOG), MSN, Vonage, and others?

How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?

The Internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO) or Vonage or anybody to expect to use these pipes [for] free is nuts!

What’s your approach to regulation? Explain, for example, the difference between you and Verizon in how you are approaching regulatory approval for Telco TV [digital-TV service offered by telecoms].

The cable companies have an agreement with the cities: They pay a percentage of their revenue for a franchise right to broadcast TV. We have a franchise in every city we operate in based on providing telephone service.

Now, all of a sudden, without any additional payment, the cable companies are putting telephone communication down their pipes and we’re putting TV signals. If you want us to get a franchise agreement for TV, then let’s make the cable companies get a franchise for telephony.

If cable can put telephone down their existing franchise I should be able to put TV down my franchise. It’s kind of a “what’s fair is fair” deal. I think it’s just common sense.

What if the regulators don’t agree?

Then there won’t be any competition–there will be a cable-TV monopoly.

I know you’re a competitive person. Who are your biggest competitors?

Our big competition in the future is with the cable companies. Verizon’s going to be a player, and certainly I want to compete. And I want our shareowners to do better than anyone else.

If I were BusinessWeek, I’d ask:

What about the free and open marketplace that has grown on the Net itself? Do you have any interest in continuing to support that? Or in lobbying forms of deregulation that foster it? Or are you just in a holy war with the cable companies inside the same old regulatory environment you’ve known since forever?

I’d ask:

If you were to buy, say, Level 3, would you start to filter and restrict content at the transport level, to extract the profits you want, without regard for other market consequences? Would Cisco, builder of the great Firewall of China, help out?

I’d ask:

Which do you prefer: The regulatory environment where your business has adapted itself for more than a century, or a completely free and open marketplace like the rest of us enjoy sitting on top of your pipes?

Of course, the truth of the matter is that the telcos have been moving rapidly through massive consolidation–and a range of other tactics–to create an environment where “competition” will only be a pale reflection of what we were originally promised, with only a few gigantic players in control of all telecom resources and policies. Like the robot cop in Terminator 2 that reformed from blown-apart mercurial blobs of metal, the “golden age” of telecom competition is already giving way to empire.

Don’t blame BusinessWeek for not asking the important questions or for missing the Carriers vs. Net story. Biz pubs love to cover vendor sports. And there’s certainly a big story here.

Great distraction, vendor sports. While we’re busy watching phone and cable giants fight over a closed battlefield that ought to be open, we miss Net-hostile moves by other parties that result in other lost freedoms.

Take ICANN, for instance, where a new .com Registry Agreement allows Verisign to raise the rates for .com names by 7% annually, and to operate .com in perpetuity, and to “mak[e] commercial use of, or collect, traffic data regarding domain names or non-existent domain names”, and to reap other rewards for what few other than Verisign would agree is a good job. Bret Faucett summarizes the darkest shadow across the noir scenario we’ve already described:

The theme running through all of these is that ICANN and Verisign are treating the .COM registry as a private resource. It’s not. The root servers and TLD servers are public resources. We should treat them like that.

Bret has one of the most eloquent voices in the wilderness of clues the Big Boys would rather avoid. So does Susan Crawford, who was just, perhaps miraculously, named to the ICANN board.

For Bret, Susan and the rest of the restless natives of this new world, what matters most is Saving the Net–keeping it a free and open marketplace for everybody–while also making sure that carriers of all kinds can compete and succeed while providing much of the infrastructure on which that marketplace resides. That means we need to understand the Net as more than a bunch of pipes and business on the Net as more than transporting and selling “content”.

This isn’t a trivial issue. It’s a matter of life and death for the Net itself. How are we going to fight?

Meanwhile the Net continues to cry out for a definition all can agree on. Toward that goal, I wrote this in The Intention Economy:

To simplify things a bit, look at the Net’s future as a battleground where any and only fight it out. On the side of any are the Net’s protocols. On the side of only are governments and businesses with interests in restricting and controlling access to the Net, and thwarting many purposes to which the Net might be put. This battle also happens inside our own heads, because we tend to view the Net both ways. Ironies abound.

For example, the Internet is often called a “network of networks,” yet the Net was designed to transcend the connections it employs, and is therefore not reducible to them. It is not comprised of wiring, and is not a “service,” even though it’s called one by ISPs.

So let’s look at the sides here. On the any side, “net-heads” (yes, they call themselves that) frame their understanding of the Net in terms of its protocols, and those protocols’ virtues. On the only side, “bell-heads” (yes, they call themselves that, too) frame their understanding of the Net in terms of wiring infrastructure and billing systems.

To net-heads, the Internet is a vast new virtual space with qualities such as neutrality and generativity. To maximize economic opportunity and vitality, those virtues need to be maximized—even if phone and cable TV businesses don’t wish to acknowledge or support those virtues.

To bell-heads, the Internet’s “network of networks” is a collection of mostly private properties, with which owners should be free to do what they please. So, if what pleases them is throttling certain kinds of data traffic to maximize QoS (Quality of Service), too bad. They are The Market, which will grow best if they act in their own economic self-interest. Hey, look at all the good they’ve done already. (Want dial-up again, anyone?) And look at the robust competition between cable and phone companies. Isn’t that producing enough economic benefits for everybody?

Since net-heads tend to make social arguments while bell-heads tend to make economic ones, net-heads get positioned on the left and bell-heads on the right. Between the two are boundless technical arguments that aren’t worth getting into here.

I’m a net-head, but one who wants both sides to recognize that the Net’s original design is encompassing and beneficial for economies and societies everywhere. That is, I believe the argument for the Net is the same as the one for gravity, sunlight, the periodic table and pine trees: that it is part of nature itself. What makes the Net different from all those other products of Nature is that humans made the Net for theselves.

The Net’s nature—its essential purpose—is to support everything that uses it, just as the essential purpose of a clock is to tell time. So, while the Net today relies on phone and cable connections, its support-everything purpose should not be subordinated to legacy phone and cable TV businesses. The Internet, in the neutral and generative form defined by its protocols, is a far larger and more interesting market environment than the one defined by the parochial and limited interests of phone and cable companies, both of which are desperately trying to hold on to their legacy businesses, and would be better served by embracing all the opportunities the Internet opens up, for everybody.

We’re going to evolve past those old businesses anyway. Phone and cable company engineers know that, and so do many of the business leaders in those companies, even as they fight to protect their legacy businesses at all costs.

As a pro-business guy, I sympathize with phone and cable companies, which are cursed by the need to maintain margins in existing business while building out infrastructures that obsolete those businesses (at least as we know them). These companies get little credit (especially from net-heads) for their genuine innovations, and for their ability to innovate more. We do need them, whether we like them or not…

So, then

The Net’s capacity to support limitless economic activity and growth will win in the long run because it will prove out in the very marketplaces it support. But there will be a great deal of resistance along the way, as the narrow interests of both Big Government and Big Business try to contain the Net’s potential within the scope of their own ambitions. Still the evolutionary direction of the Net is toward ambient connectivity. Whatever that looks and feels like, it won’t resemble either the phone system or cable TV. Rather it will look like everything, together.

That’s the long-term optimistic view. Meanwhile, there is much cause for pessimism in the short term.

In this comment and this one under my last post, Ian Falconer brings up a bunch of interesting points, some of which are summarized by these paragraphs from his first comment…

Here in the UK most people over 40 will remember placing calls via a human operator. A real life person who had a direct interaction with both caller and receiver when reversing the call charges. In smaller towns and villages this meant that the operator knew who was phoning who, when and often, given their overarching view, could assume why.

This was socially accepted as the operators were usually local and subject to the same social norms as the friends and neighbors they ‘surveilled’.

But they were also employees of the GPO (General Post Office) with a national security obligation and had a direct reporting route into the national security apparatus, so that, if they felt that something fishy was afoot (especially in times of war), they were assumed to be both reliable and honest witnesses.

No-one assumed secrecy in an operator-mediated system. They assumed discretion on the part of the operator.

Is an ISP any different just because the data is package-based rather than analogue ? It conducts all the same functions as the old operator.

The shift from public ownership to private and from land-lines to mobile has not changed the underlying model of presumed access (as far as teleco users are concerned) and assumed responsibility (on the part of the national security apparatus). And though both are now legally defined under the license terms of privatised telecos, few of the UK’s public know how their comms systems actually work, so often assume a similar design ethos to the US, where constitutionally defined rights are a starting point for systems organisation.

That British Telecom evolved from the GPO is no accident, but neither is it necessarily a designed progression intend on increased surveillance.

… and these from his second:

Against most evidence US Congress doesn’t set UK law. The EU & UK governments do that. And against most evidence the US doesn’t set global social norms. So while I’m not saying Brits explicitly like spies and respect code breakers, there is a history here that forms a backdrop to the national mind set and it looks towards Bletchley Park, Alan Turing & James Bond rather than The Stasi, Senator McCarthey or Hoover’s G-Men.

The time and place to look for a failure of oversight is the sale of rights to spectrum access but a global technological fix for a perceived lack of communicational security, especially a US-led one, seems unlikely. The righteous indignation with respect to Huwei hardware looks like a starting point rather than an end point right now.

To me these events and discoveries more likely to work to fragment the rough and ready constellation of networks into national gardens once more. This would force comms through regulated conduits making in-out surveillance even easier and I tentatively suggest that in the legislation of whatever-comes-next those carrying out oversight do a better job, if legally-enshrined privacy is their aim.

I am somewhat familiar with the UK, having spent a number of years consulting BT. I have also spent a lot of time in the EU, mostly studying and collaborating with VRM developers, a large percentage of which are located in the UK and France.

Here in the U.S. many of us (me included) still had “party lines” and required operator assistance for long-distance calls as recently as the mid-’70s. With party lines phone connections were shared by as many as six other homes, and people could listen in on each other easily. Operators could listen to anything, any time. Thus, as Ian says, discretion rather than secrecy was assumed.

And discretion is The Thing. As it was with the old phone system it also was with spying, which every government does, and we have always assumed was going on — much of it outside the laws that apply to the rest of us — and hopefully for some greater good. Thus whatever we end up with on the Internet will rest on a system of manners and not just of laws and technologies.

Ideally law, technology and manners work in harmony and support each other. What we have had so far, in the era that began with personal computing and grew to include the Internet and smart mobile devices, has been a disharmonious cacophony caused by technology development and adoption with little regard for the incumbent systems of manners and law. And it is still early in the evolution of all three toward working harmony such as we have long experienced in the physical world.

Of those three, however, manners matter most. It seems no accident, to me at least, that the Internet is defined by protocols, which are nothing more than mannerly agreements between network operators and among the human and organizational operators of the network’s billions of end points.

Security of the telco-like centralized locked-down sort was never in the DNA of the Internet Protocol, which is one reason why it never would have been invented by the very companies and governments through whose local, national and international networks the Internet connects us all.

So it should be no surprise, aside from all the privacy concerns currently on the front burner of popular consciousness, that telcos, cablecos, national governments and institutions such as the ITU have busied themselves with stuffing the Internet, in pieces, back inside the regulatory, billing and nationally bordered bottles from which it more or less escaped, at first un-noticed, in the 1980s and early 1990s.

J.P. Rangaswami, when he was at BT, famously noted that a telco’s main competency was not communications but billing. It still is. China’s censored national subset of the world wide Internet is for many countries a model rather than an aberration. And the drift of Net usage to cellular mobile devices and networks has re-acclaimated users to isolated operation within national borders (lest they suffer “bill shock” when they “roam” outside their country) — something the landline-based Internet overcame by design.

All these things play into our evolution toward privacy in the virtual world that is recognizably similar to what we have long experienced in the physical one.

National mind sets are important, because those embody manners too. Public surveillance is far more present, and trusted, in the U.K. than in the U.S. I also sense a more elevated (and perhaps evolved) comprehension of privacy (as, for example, “the right to be left alone”) in Europe than in the U.S. I am often reminded, in Europe, of the consequences of detailed records being kept of citizens’ ethnicities when WWII broke out. Memories of WWII are much different in the U.S. We lost many soldiers in that war, and took in many refugees. But it was not fought on our soil.

There is also in Europe a strong sense that business and government should operate in symbiosis. Here in the U.S., business and government are now posed in popular consciousness (especially on the political and religious right) as opposing forces.

But all these things are just factors of our time. What matters most is that the whole world will need to come to new terms with the three things I listed in my earlier Thoughts on Privacy post: 1) ubiquitous computing power, 2) ubiquitous Internet access, and 3) the unlimited ability to observe, copy and store data. All these capacities are new to human experience, and we have hardly begun to deal with what they mean for civilization.

I suspect that only the generation that has grown up connected — those under, say, the age of 25 — begin to fully comprehend what these new states of being are all about. I’ve been young for a long time (I’m 66 now), but the best I can do is observe in wonder those people who (in Bob Frankston‘s words) assume connectivity as a natural state of being. My 16-year old son feels this state, in his bones, to a degree neither I nor my 40-something kids don’t. To us elders, connectivity is an exceptional grace rather than a natural state.

I just hope that the laws we are making today (protecting yesterday from last Thursday, as all new laws tend to do) will be improved by new generations made wiser by their experiences with technologies made ubiquitous by their elders.

On February 25, 2008, the FCC held a hearing on network management practices in the Ames Courtroom at Harvard Law School, hosted by the Berkman Center. In that hearing David P. Reed, one of the Internet’s founding scientists, used a plain envelope to explain how the Internet worked, and why it is wrong for anybody other than intended recipients to look inside the contents of the virtual envelopes in which communications are sent over the Internet. It was a pivotal moment in the debate, because the metaphor illustrated clearly how the Internet was designed to respect privacy.

Respect, that is. Not protect.

In the early days of postal communications, the flaps of envelopes were sealed with blobs of wax, usually imprinted by the sender with a symbol. These expressed the intent of the sender — that the contents of the letter were for the eyes of the recipient only. Yes, a letter could be opened without breaking the seal, but not without violating the wishes of the sender.

The other day I wrote, “clothing, for example, is a privacy technology. So are walls, doors, windows and shades.” In the physical world we respect the intentions behind those technologies as well, even though it might be easy to pull open the shirts of strangers, or to open closed doors without knocking on them.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I see three ways to approach these violations.

One is to rely on geeks and whistleblowers to pull the pants down on violators. In Welcome to the end of secrecy, Jeff Jarvis says the very openness that invites privacy violations is our best protection against the secrecy concealing those violations.

Another is through the exercise of law. In The Only Way to Restore Trust in the NSA, security guru Bruce Schneier writes, “The public has no faith left in the intelligence community or what the president says about it. A strong, independent special prosecutor needs to clean up the mess.” And that’s on top of moves already being made by legislators, for example in South Africa. Given the scale of the offenses now coming to light, we’ll see a lot more of that, even if no special prosecutors get appointed. The law of the jungle will give way to a jungle of new laws. Count on it.

The third is through business — specifically, business modeled on postal services. For many generations, postal services have respected the closed envelope as a matter of course. Yes, we knew there were times and places when mail could be inspected for legitimate reasons. And there were also many things it was not legal to do, or to send, through postal systems. But, on the whole, we could trust them to keep our private communications private. And we paid for the service.

The Googles of the world — companies making their money on advertising — aren’t likely to take the lead here, because they have too much invested in surveillance (of the legal sort) already. But others will step forward. The market for privacy is clear and obvious, and will only become more so as the revelations of abuse continue to pour out.

Perhaps the businesses best positioned to offer secure communications are the postal services themselves. They’ve already been disrupted plenty. Maybe now is the time for them to do some positive disruption themselves.

I learned about it via Dana Spiegel of NYC Wireless, who will be on a panel titled “Breakout Session III: Infrastructure for the 21st Century—How Fast, Reliable Internet Access Can Boost Business Throughout the Five Boroughs.” In an email Dana wrote, The question for the panel participants is how fast, reliable internet access can boost business throughout NYC.” The mail was to a list. I responded, and since then I’ve been asked if that response might be shared outside the list as well. So I decided to blog it. Here goes:

Fast and reliable infrastructure of any kind is good for business. That it’s debatable for the Internet shows we still don’t understand what the Internet is — or how, compared to what it costs to build and maintain other forms of infrastructure, it’s damned cheap, with economic and social leverage in the extreme.

Here’s a thought exercise for the audience: Imagine no Internet: no data on phones, no ethernet or wi-fi connections at home — or anywhere. No email, no Google, no Facebook, no Skype.

That’s what we would have if designing the Internet had been left up to phone and cable companies, and not to geeks whose names most people don’t know, and who made something no business or government would ever contemplate: a thing nobody owns, everybody can use and anybody can improve — and for all three reasons supports positive economic externalities beyond calculation.

The only reason we have the carriers in the Net’s picture is that we needed their wires. They got into the Internet service business only because demand for Internet access was huge, and they couldn’t avoid it.

Yet, because we still rely on their wires, and we get billed for their services every month, we think and talk inside their conceptual boxes.

Try this: cities are networks, and networks are cities. Every business, every person, every government agency and employee, every institution, is a node in a network whose value increases as a high multiple of all the opportunities there are for nodes to connect — and to do anything. This is why the city should care about pure connectivity, and not just about “service” as a grace of phone and cable companies.

Building a network infrastructure as neutral to purpose as water, electricity, roads and sewage treatment should be a top priority for the city. It can’t do that if it’s wearing blinders supplied by Verizon, Time Warner and AT&T.

Re-base the questions on the founding protocols of the Net itself, and its city-like possibilities. Not on what we think the carriers can do for us, or what we can do that’s carrier-like.